Mayfair-based estate agent Winkworth today warned the Chancellor’s tax grab on overseas buyers was casting a shadow over the top end of the London property market.

The firm — which first opened its doors in 1835 — has had to weather a stamp duty hike on properties worth more than £2 million this year, as well as new rules levying a 15% duty on those buying homes through a company. A mansion tax is off the agenda for now but Winkworth said the market is “difficult to forecast as it risks being subject to further government intervention”.

Chief executive Dominic Agace still expects London prices to rise 5% next year but said: “The agenda against the overseas buyer is a significant concern because they account for between 60% and 80% of the top end of the London market.”

Sales of homes worth more than £2 million had fallen by around 20% since the new stamp duty threshold had been introduced.

Agace added that it would take the property market until 2015 to get back to the long-term average of a million property transactions a year, last seen in 2005, from the present 600,000. “In terms of the market, 2006 and 2007 were freak years,” he said.

The capital’s rental market is also expected to be driven by scarce supply and prices should continue to rise, the firm added.